Ten Years Of Hell

I don't know what exactly we need to do to fix the economy, but here's another indication that there are some real problems (in this case, it's mortgages and loan modification at JP Morgan). This particular difficulty seems to stem from the tendency of large organizations to become disconnected from the people they are supposed to be all about.

From Calculated Risk, here's Jamie Dimon on why it's hard to get through all of the adjustments to their borrowers' mortgages:

"We have not thought of a better way to do it than loan by loan, which is does the person want to live there, can they afford to live there, and we really think that the payment, how much you're paying is more important than principal. Even if you are going to do something on principal, to do it right you have to do it loan by loan and it effectively comes a similar kind of thing. The difficulty is the loan by loan part and we've asked the government and I think they tried to streamline a little bit to have programs because there's too much paperwork involved in it so a lot of the reasons we're not getting to final modifications half the time we don't finish the paperwork, so they need the lower payments but they weren't finishing the paperwork so we're trying to get better at it, honestly, we rack our brains to figure out if there's a better way to do it and you can do it more macro than loan by loan but once you start talking about macro, you're going to get involved in a lot of issues about whether the people live there, whether they have the ability to pay, whether they were honest when they first told people how much their incomes were, so we're working through it."

Administering such a huge number of loans one by one (micro) is not manageable, so you have to take them in batches (macro). But you can't really bundle them together because then you can't pick out the 'good ones' from the 'bad ones'.

Inadvertently or otherwise, these guys keep making the argument in favor of breaking up the big houses, and we keep ignoring the necessity of doing just that.